Renting of Immoovable property as Bungalow

[P S SATYA NARAYANA]

Dear Sir,

 

We are a Public Limited Company.  We have let out one of our Bungalows to another Corporate entitiy as Guest house and charge rent along with other maintenance charges (building maintenance) and Cook salary.  Does this attracts Service Tax.

[CASeetharaman KC]

Only renting of residential dwelling for use as residence is specifically included in the Negative list and hence excluded from the purview of service tax . All other rental receipts are taxable. Therefore rent receipts would be subject to service tax. Regarding maintainence services this is also a service provided and would be taxable if it is a lumpsum figure including labour and material. As you are saying that you are charging maintainence I would presume that you are billing lumpsum for material and labour.If the material for the repair is purchased by the tenant and your labour portion is billed separately by you then you need to charge service tax on the labour portion only. As far as cook's salary is concerned it would be supply of manpower for any purpose and would be subject to service tax but not under reverse charge mechanism as both service receiver and service provider are corporates. I suggest to be on the safer side and to avoid litigation it would be ideal to pay service tax on the whole amount and vail CENVAT credit if the service receiver is paying service tax on services rendered by them

[YAGAY andSUN]

Threshold limit will play an important role for determining the service tax liability.

[JAMES PG]

Cenvat credit eligibility for Guest House maintenance of a corporate is subject to the provisions of CCR

AI Summary

Service tax applies to bungalow rental income and maintenance; cook's salary taxed as manpower supply. Consider CENVAT credit. A public limited company inquired about the applicability of service tax on renting a bungalow to another corporate entity as a guest house, including charges for maintenance and cook salary. It was clarified that rental income, except for residential dwelling used as a residence, is taxable. Maintenance services are taxable if billed as a lump sum, while cook's salary is considered manpower supply and subject to service tax. To avoid litigation, it is advised to pay service tax on the entire amount and utilize CENVAT credit if applicable. The threshold limit and CENVAT credit eligibility were also noted as important considerations.